Original author: Messari
Original text translation: Deep Tide TechFlow
Introduction
It's that time of year again for summary and outlook.
As a top-tier research institution in the industry, Messari released its annual report (The Crypto Theses 2025) last week, providing a comprehensive description and forecast of the cryptocurrency industry's development history in 2024 and trends for 2025.
The report contains several highlights, such as the expectation that BTC will mature as a global asset next year, and the property of memes as a speculative outlet will continue to attract users.
This report consists of two main parts. First, it starts with "The State of Cryptocurrency," which includes a brief article on the state of the crypto market in 2024; second is "Segment Research," reviewing the narratives and forward-looking theories of major segments.
However, considering the original report is 190 pages long, reading it in full can be time-consuming; Deep Tide TechFlow has extracted and summarized the key content of the original report, presenting the most important points, especially the predictions and outlook sections of each subsection.
Macro environment: Breaking pessimistic expectations, providing strong support for crypto
Key developments
The economic trend in 2024 breaks most pessimistic expectations, with the US economy displaying unexpected resilience. The Federal Reserve was able to implement rate cuts of 50 and 25 basis points in September and November, achieving a relatively smooth policy transition.
The S&P 500 index rose approximately 27% over the year, ranking in the top 20% historically, fully reflecting the market's confidence in an economic soft landing. Notably, apart from the temporary fluctuations caused by unwinding yen carry trades and geopolitical factors, the market maintained robust upward momentum overall.
Unique patterns in the cryptocurrency market
The crypto market faces a dual test in 2024. On one hand, it needs to deal with various risk factors from traditional markets, while on the other hand, it must overcome industry-specific challenges, including the German government's sell-off pressure, Mt. Gox's token distribution, and investigations into Tether. The market underwent an 8-month consolidation period until the election became a breakthrough catalyst.
2025 forecast
The macro environment is expected to provide strong support for crypto assets. Specifically:
The Federal Reserve has begun to ease the tightening policy that has been in place since 2022 but has not yet entered a substantial easing phase. This gradual policy adjustment is expected to provide stable support for the market;
Volatility across various assets significantly decreased after the election. Based on historical experience, low volatility often breeds lower volatility, which is particularly favorable for the development of crypto assets like Bitcoin and Ethereum;
Most importantly, there is a fundamental improvement in the regulatory environment. Even a relatively neutral regulatory stance will bring significant improvement compared to the severe controls of the past four years. This change is expected to eliminate major concerns for institutional investors entering the market and bring in more incremental funds;
The stablecoin sector may become a breakthrough. The bipartisan openness towards stablecoin regulation creates favorable conditions for advancing relevant legislation in 2025;
Institutional funds: A comprehensive entry
Significant changes in the market landscape
In 2024, the entry of institutional funds will no longer be talk. The approval of Bitcoin and Ethereum ETFs marks the formal recognition of the cryptocurrency asset class, providing more convenient access channels for institutional and retail investors;
BlackRock's IBIT sets records: the first ETF to reach $3 billion AUM within 30 days of issuance, and to surpass $40 billion in about 200 days. This shows strong institutional demand for crypto derivatives;
Diversification of institutional participation
Institutional participation goes far beyond ETF investments. Traditional financial institutions are making significant progress in multiple areas: asset issuance, tokenization, stablecoins, and research;
Institutions like Sky (formerly MakerDAO) and BlackRock have launched on-chain money market funds. Ondo Finance's USDY (tokenized government bond fund) has reached approximately $440 million in asset size;
Integration of financial technology
In May, PayPal issued its stablecoin PYUSD on Solana, and Agora, backed by Nick Van Eck, also launched its stablecoin AUSD on multiple chains, supported by Van Eck (an asset management firm) and custodied by State Street;
2025 predictions
The depth and breadth of institutional participation are expected to further expand. As BlackRock continues to position digital assets as a non-correlated asset class worthy of small allocations, stable inflows from ETFs are likely to continue. More importantly, institutions are looking for innovative opportunities across multiple verticals to reduce costs, improve transparency, or accelerate payment efficiency;
Particularly noteworthy is that traditional financial giants like JPMorgan and Goldman Sachs are accelerating their layouts. They are not only expanding their own blockchain platforms but also exploring a wider range of product offerings;
This trend indicates that institutions are no longer viewing crypto solely as an investment asset but are beginning to take its potential as financial infrastructure seriously;
Meme: The heat will continue
2024 market landscape
Meme coins, despite only accounting for 3% of the top 300 cryptocurrencies (excluding stablecoins) by market cap, continue to capture 6-7% of trading volume, recently even climbing to 11%;
The rise driven by politically themed meme coins like Jeo Boden in the first quarter, followed by TikTok meme coins (like Moodeng and Chill Guy) and AI agent concepts (like Truth Terminal's GOAT) continues this momentum;
Market drivers
The boom in meme coins is not only due to trends or user-friendly interfaces but also relies on two key conditions:
Excess capital: As the entire crypto market appreciates, many traders have accumulated significant funds but lack quality investment opportunities;
Ample block space: High-throughput networks like Solana and Base provide a low-cost, efficient trading environment;
This environment is particularly evident on Solana. The strong market performance at the end of 2023 and the beginning of 2024 has allowed Solana users to accumulate significant capital.
Evolution of trading infrastructure
User-friendly trading platforms significantly drive the popularity of meme coins. Applications like Pump.fun, Moonshot, and Telegram bots simplify the operations for retail traders;
Especially Moonshot, which bypasses traditional cryptocurrency deposit channels by supporting payments via ApplePay, PayPal, or USDC on Solana, attracting a large number of new retail investors with its intuitive interface and simple registration process;
Predictions for 2025
Predictions for 2025 indicate that meme coins are expected to continue growing, mainly due to several key factors:
Infrastructure support: High-throughput chains like Solana, Base, Injective, Sei, and TON provide ample block space, allowing meme coin trading without incurring high costs;
User experience optimization: Applications like Moonshot and Pump.fun continue to lower the entry barriers and simplify trading processes, likely attracting more retail participants;
The macro environment aligns: The property of meme coins as a speculative outlet, akin to gambling, may continue to attract users seeking entertainment and profit in the current macro environment;
Financing landscape: AI leads emerging investment themes
Market overview
Financing of crypto projects shows an upward trend compared to 2023. Although the total financing of startup projects and protocols decreased by about 20% year-over-year (mainly affected by anomalies in the first quarter of 2023), the market still saw several large financing rounds;
Important financing cases
Monad Labs: Raised $225 million in April, showing that infrastructure and L1 projects remain a key investment focus for VCs;
Story Protocol: Completed $80 million in Series B financing, led by a16z, aimed at turning intellectual property into programmable assets;
Sentient: Raised $85 million, led by Thiel's Founders Fund, focusing on an open AGI development platform;
Farcaster and Freechat: Raised $150 million and $80 million respectively, indicating sustained capital interest in the social space;
The rise of AI and DePIN
AI project financing totaled nearly 100% year-over-year growth, with funding rounds increasing by 138%;
DePIN project financing totaled roughly 300% year-over-year growth, with funding rounds increasing by 197%;
AI rounds are particularly popular in accelerator projects like CSX and Beacon. Investors show significant interest in the crossover between crypto and AI.
Emerging investment themes
In addition to AI and DePIN, several noteworthy financing trends emerged in 2024:
The decentralized science field is starting to receive attention, with projects like BIO Protocol and AMINOChain receiving financing;
VCs in the Asia-Pacific region are more inclined to invest in gaming protocols, especially projects launched on the TON blockchain;
The financing share of NFT and metaverse projects has significantly declined compared to 2021 and 2022;
The social sector continues to experiment, with projects like Farcaster, DeSo, and BlueSky receiving financing support, although past success cases have been limited;
Cryptocurrency users, new evidence of growth
Market size breakthrough
According to a16z's report, the monthly active addresses for cryptocurrencies reached a historic high of 220 million, with a growth trend similar to early internet adoption. Although this figure may contain duplicate counts (as many users use multiple wallets), an estimated 30-60 million real monthly active users remain after filtering;
Key cases for user growth in 2024
The breakthrough of the Phantom wallet, becoming the most popular wallet in the Solana ecosystem, briefly ranked in the top ten on the IOS app store, surpassing WhatsApp and Instagram;
The application of stablecoins in emerging markets: Sub-Saharan Africa, Latin America, and Eastern Europe are beginning to bypass the traditional banking system and directly adopt stablecoins; platforms like Yellow Card, Bitso, and Kuna are promoting adoption through stablecoin exchanges and payment APIs;
The explosion of Telegram Mini-Apps: Notcoin has over 2.5 million holders, Hamster Kombat attracts 200 million users, with 35 million YouTube subscribers;
Polymarket's practical application: Rapid growth during the election period, adding nearly 1 million accounts, once becoming the second most downloaded news app on IOS;
Base and Hyperliquid driving CEX users on-chain: Base L2 provides a free transfer channel from Coinbase to Base, Hyperliquid offers a CEX-like high-performance trading experience for perpetual contract traders;
2025 predictions
The crypto ecosystem is no longer just preparing for mass adoption; it has already begun to realize it;
User growth is shifting from sporadic, noise-driven entry patterns to a model of natural discovery and sustained growth through various applications. Meme coins, consumer applications (like Phantom and Telegram), prediction market platforms, and the growing on-chain utility will continue to drive compound growth;
The next key step is to make blockchain navigation more retail-friendly, greatly improved through new innovations like chain abstraction and front-end aggregation;
Bitcoin: This year has been great, and next year will be even more mature
Key developments in 2024
Price and institutional adoption
Starting from $40,000, after the approval of ETFs, it hit a new high of $75,000 in Q1, and surpassed the important $100,000 mark after Trump's victory;
Bitcoin's market cap dominance rises to about 55%;
ETF issuers hold over 1.1 million Bitcoins, with BlackRock and Grayscale accounting for 45% and 19% respectively;
After the approval of ETFs, there was only a single month of net outflows in April; BlackRock's IBIT continues to be the largest net buyer, with approximately $8 billion inflow in November alone;
MicroStrategy continues to purchase on a large scale, with the latest acquisition of $2.1 billion in Bitcoin between December 2 and 8, holding approximately 420,000 Bitcoins, second only to Binance, Satoshi Nakamoto, and ETF issuers;
Michael Saylor and MicroStrategy (MSTR) continue to DCA, with a BTC-centered strategy incentivizing other publicly traded companies like Marathon Digital Holdings (MARA), Riot Platforms, and Semler Scientific to start accumulating BTC reserves;
2024 will also be a halving year for BTC, and the number of natural sellers of Bitcoin will decrease over time;
Network innovation
The rise of Ordinals and Runes
Ordinals bring NFT functionality to Bitcoin, with Runes introduced as a new token standard, similar to Ethereum's ERC-20;
Some Runes projects are valued at nine figures, showing market recognition of Bitcoin's ecosystem expansion;
Breakthroughs in Bitcoin's programmability and staking innovations
The emergence of BitVM brings arbitrary computation possibilities to Bitcoin, with over 40 Layer-2 projects launched on testnets or mainnets;
CORE, Bitlayer, Rootstock, and Merlin Chain lead in TVL;
Babylon launched as Bitcoin's first staking protocol in Q3, with the first round of 1,000 BTC staking capacity reached within 6 blocks;
Liquid staking tokens like Lombard's LBTC have begun to emerge;
Predictions for 2025
The inflow of Bitcoin ETFs has greatly exceeded expectations, and over time, institutions are likely to slowly become the main driver of daily BTC price movements;
ETFs can purchase spot Bitcoin without using leverage. Spot inflows from institutions are smoother and more consistent, which should reduce reflexive, leverage-driven volatility, thereby helping Bitcoin mature as an asset;
The approval of Bitcoin ETFs may place BTC in the early mid-stage of becoming the world's leading store of value. In November, Bitcoin surpassed silver to become the eighth most valuable asset globally, partly due to ETF inflows throughout the year. Year-end trends indicate that ETF inflows will continue to increase in 2025, especially as Grayscale's GBTC shifts to positive net inflows;
In terms of regulation, the new Trump administration has shown a positive attitude towards cryptocurrencies and Bitcoin, making promises related to Bitcoin during the campaign. While Bitcoin quickly repriced after Trump's victory, the government ultimately needs to deliver on some of its claims;
Although we predict the likelihood of this occurring is low, a federal strategic Bitcoin reserve would be particularly influential. The market seems cautiously optimistic about the Trump administration; if the President can realize some high-probability action items, it could build enough goodwill to maintain Bitcoin's bullish sentiment going forward;
After the 2024 election, the impact of clear and proactive cryptocurrency reforms will become a major issue for all government departments, and we believe that cryptocurrencies are about to gain bipartisan support. Its impact is significant and will help eliminate the regulatory uncertainties surrounding Bitcoin in the foreseeable future;
On Runes and Ordinals, we believe the dust has settled, and by 2025 the opportunities will be very enticing;
Magic Eden is the driving force behind improving Bitcoin's UI/UX; if the Bitcoin ecosystem takes off, we expect them to be clear winners;
The programmability of Bitcoin and BTC staking are still in their infancy, with early TVL growth not yet sufficient to indicate real demand; consumers largely favor the performance capabilities of networks like Solana and Base; if this trend continues, Bitcoin builders will face a tough battle;
Ethereum: Identity crisis and future opportunities
Overview of performance in 2024
Ethereum has had an extraordinary year. As the "second brother" in the crypto market, it competes with Bitcoin's hard currency narrative while also facing challenges from new blockchain "younger brothers" like Solana. Key performance includes:
Significantly underperforming compared to other major crypto assets, especially against Bitcoin and Solana;
The Layer-2 ecosystem continues to grow, but mainnet activity has notably decreased; ETH has seen sustained inflation for the first time instead of the expected deflation;
Initial capital inflows after the approval of ETFs were limited, only beginning to accelerate recently;
L2 scaling capacity increased 15 times, with a cumulative throughput of about 200 TPS;
The rapid growth of Base has sparked discussions around "the future of Ethereum is Coinbase," but the decentralization of the L2 ecosystem has negatively impacted user experience and developer experience;
Key outlook for 2025
L2 is better than L1
Layer-2 design allows for a more flexible execution environment, superior to native Layer-1; high throughput L2s (like MegaETH) have theoretical capacities far exceeding fast L1;
Application chains can achieve better trade-offs, such as custom transaction priority;
Two feasible models for increasing value capture
Ethereum faces two paths for value capture:
Fees don't matter approach
Current fees mainly stem from speculative activities, with sustainability in doubt;
Token valuations should be based on "security demand" rather than fees; maximum application creates the highest security demand, driving the value of native assets;
Enhancing fee capture routes
Native rollups can enhance mainnet value capture and improve data availability costs;
Expand foundational layers to compete with ordinary EVM Layer-2s;
New opportunities for the ecosystem as a whole
A super rollup, interconnected based-rollup networks, or high-fee burning may all become successful paths;
Regaining shares in the native speculative crypto market will drive institutional interest;
The decentralized nature of the ecosystem allows any participant to potentially facilitate this transition;
Solana: From a follower to a mainstream ecosystem
Key performance in 2024
Solana has shifted from "post-FTX crash recovery" to a deterministic breakthrough. Major achievements include:
From a "duopoly" competition between Bitcoin and Ethereum to a "tripartite" pattern;
Network stability significantly improved, with only one 5-hour interruption throughout the year; total locked value (TVL) in DeFi grew from $1.5 billion to over $9 billion; the issuance of stablecoins grew from $1.8 billion to nearly $5 billion;
Positioning itself as a speculative venue, especially through meme coin trading. The seamless user experience of ecosystem wallets, along with platforms like Pump.fun and Moonshot, has made issuing and trading tokens easier than ever;
This series of on-chain activities even propelled Solana's on-chain fees to occasionally surpass Ethereum, highlighting the network's accelerating momentum and retail appeal;
Key outlook for 2025
Ecosystem expansion
Expecting applications that go beyond speculation: We are particularly excited about the prediction market of MetaDAO, and the emerging Solana L2 ecosystem is worth watching to see if it can compete effectively with its Ethereum counterparts;
AI trend pioneering: ai16z has become one of the most trend-value repositories across all fields on Github. The Solana ecosystem not only embraces AI x Crypto but also leads this trend;
Interest from traditional finance
Under the ETF trend, investors may seek to invest in "tech stocks" in this field, with Solana emerging as the fastest horse;
The launch of a spot Solana ETF seems inevitable within the next year or two, creating a perfect storm for the explosive second phase of the Solana story;
Increased competition
Next year is expected to see a batch of brand new Layer 1 blockchains (like Monad, Berachain, and Sonic);
A revival of DeFi, AI agents, and consumer applications led by platforms like Base and numerous new L2s;
Other L1 + infrastructure 2025 outlook
Deep Tide Note: Due to space limitations, we will focus on interpreting its predictions for 2025 in this chapter; the summary of 2024 can be found in the original report, and more information is a consolidation of publicly available objective data.
Next year we will see Monad and Sonic release as two general-purpose, high-throughput, "all-in-one" Layer 1s;
Both projects have accumulated significant funding (Monad at $225 million, Sonic at approximately $250 million in FTM tokens) to attract developers and developer teams;
Berachain is one of the most interesting experiments in Layer 1; after raising $142 million in Series A and B funding, over 270 projects are dedicated to supporting the network, showing significant interest from developers and application teams;
Celestia's Lazybridging proposal and Avail's Nexus ZK proof verification layer may establish meaningful network effects for modular Layer 1 in the second half of 2025;
If successful, Unichain could trigger a wave of protocol development—bypassing Layer 1 to build application-specific or domain-specific Layer 2s to increase value accumulation and create more revenue for token holders;
Alternative virtual machines (primarily Solana and Move VM) will continue to receive attention;
Avalanche 9000, combined with Avalanche's strengths in institutional and gaming sectors, is expected to have another strong year this year;
The prospects for Cosmos in 2025 remain uncertain;
Initia will launch as Layer 1, supporting 5 to 10 application-specific, interoperable Layer 2 solutions. This strategic setup positions Initia to lead the next wave of application chain advancements;
In the interoperability race, focus on Across, Espresso, Omni Network;
In the ZK race, pay attention to Polygon's Agglayer. In 2025, it is expected that almost all infrastructure protocols will adopt ZK technology;
The line between applications and infrastructure is becoming increasingly blurred, and modular projects like Celestia, EigenDA, and Avail may benefit from this;
DeFi 2025 outlook
Base and Solana - Valuable real estate: We continue to see the prospect of Solana and Base DEX gaining market share relative to other DEXs on other chains;
Vertical integration and composability: Protocols like Hyperliquid and Uniswap have shifted to owning their own infrastructure to configure network features to benefit their applications;
Prediction markets: We expect trading volumes may decrease compared to previous election-driven trading months. To win, other protocols must provide relevant markets that bettors can continuously speculate on while incentivizing market makers;
RWA: As interest rates decline, tokenized government bonds are expected to face resistance; idle on-chain funds may gain more favor, with a focus potentially shifting from purely importing traditional financial assets to exporting on-chain opportunities. Even if macroeconomic conditions change, RWAs have the potential to maintain growth and diversify on-chain assets;
Point systems: We expect points to remain at the core of protocols aimed at guiding user adoption through token distribution, powering market and yield trading protocols. Entering 2025, protocols may refine their point programs while nurturing early adopter communities;
Driven by new opportunities in yield farming and the speculative appeal of point-based incentives, yield trading protocols like Pendle are expected to grow further.
AI X Crypto 2025 outlook
Bittensor and Dynamic TAO: New AI coin gambling houses
Each existing subnet (and future subnets) will have its own tokens, which will essentially be associated with Bittensor's native TAO tokens;
The AI competition is a talent competition, and Bittensor has a unique angle to attract talent—its subnets show early signs of producing high-quality research;
If Bittensor unexpectedly becomes the center of cutting-edge AI research in the cryptocurrency field next year, do not be surprised;
Bittensor is not just a speculative "AI coin casino" but a platform capable of attracting serious AI developers;
Decentralized model training: a stumbling block and a fulcrum
Decentralized networks will not attempt to compete with giants like OpenAI and Google by training large-scale foundational models but may focus on fine-tuning smaller specialized models;
Next year, more experiments in small and specialized models are expected. These models may be designed to perform specific tasks;
AI agents and meme coins: ongoing experiments
Most AI agents may prefer to be on-chain;
The growing token valuations can fund the continuous development of AI Agents and promote social media engagement;
We believe that with more engineers focusing on it, talent density will continue to increase;
As AI agent KOLs actively compete for attention on social media, this category will surpass "static" meme coins;
As discussions around AI's open and closed nature continue, we expect cryptocurrencies to occupy an increasingly larger part of the conversation;
DePIN 2025 outlook
By 2025, we expect energy DePIN to build supply-side infrastructure worth $500 million to $1.5 billion, while generating up to $50 million in demand-side sales;
As Helium Mobile prepares for further growth and DAWN launches its mainnet in 2025, the wireless sector will solidify its position as a groundbreaking use case in DePIN;
Revenue forecasts: The industry is expected to achieve revenues in the 8-9 figure range by 2025;
Networks like GEODNET are expected to expand supply-side coverage to provide 90%-100% coverage in high-value areas of the EU and North America by the end of 2025. Additionally, annual revenue could grow to over $10 million;
Significant progress is expected in the weather collection network vertical in 2025;
Integration and partnerships between energy and mobility DePIN are expected to further enhance grid integration and energy collection data from electric vehicle batteries;
In 2025, file storage DePIN is expected to generate $15-50 million in revenue across the entire sub-industry;
Driven by the success of projects like Grass, data collection DePIN is expected to increase in 2025;
Consumer applications 2025 outlook
The airdrop will continue to be the main way to attract players into the game. The "paid airdrop" strategy may become the new standard in 2025;
Mobile applications will be the defining trend of 2025;
In 2025, we expect Solana to continue to hold the largest share of Memecoin trading activity;
Ordinals are expected to become a category that continues to attract attention. Upcoming catalysts, such as potential CEX listings, airdrop-driven wealth effects, and the growing popularity of the Asian market, will achieve sustained growth and broader appeal throughout the year;
CeFi 2025 outlook
As the bull market continues and financing rates keep rising, Ethena's supply may continue to expand;
Yield-bearing stablecoins may not quickly capture significant market share from Tether;
Trump's appointed Secretary of Commerce Howard Lutnick managing Tether's assets may lead the U.S. to completely change its hostile stance towards Tether;
Real innovation is likely to happen behind the scenes of orchestration companies like Bridge. Stablecoin APIs (like those provided by Yellow Card) will enhance the ability of small businesses to accept stablecoins as a payment method globally;
Regarding exchanges, we will continue to see the integration of on-chain and off-chain services. Coinbase and Kraken aim to onboard as many users as possible to their L2s in 2025 and may offer incentives for this;
The new government will allow exchanges to be more lenient with the assets they choose to list. As Binance, Bybit, and Coinbase compete to list the most popular crypto assets, this trend may reach a fever pitch in 2025.
